G.R. No. 30774 - Philippine Education Co. vs. Alindada

Allied Banking Corporation (petitioner) filed a complaint for collection of debt against Jesus S. Yujuico, his co-principals, and Yujuico Logging & Trading Corporation (YLTC) in Civil Case No. R-82-8211.
The suit was instituted to collect the principal sum of ₱6,020,000.00, representing obligations under five promissory notes of YLTC, originally commenced in 1978 in the then Court of First Instance, Manila.
Jesus S. Yujuico and Gregoria Y. Paredes denied liability as parties to YLTC’s loan agreements and asserted novation, payment, and prescription; they also counterclaimed damages against Allied Bank.

The RTC dismissed the action against YLTC and Clarencio S. Yujuico for ineffective service after 13 years, and dismissed the case against Gregoria Y. Paredes due to her demise (without prejudice to claims against her estate).
Only Jesus S. Yujuico remained a defendant; he died in 2003 and was represented by Brendon V. Yujuico (legal heir).

₱800,000 on January 10, 1966, secured by continuing guarantees executed by stockholders including Jesus S. Yujuico on February 6, 1968.
Renewal and increases of credit lines from ₱800,000 (1966) to ₱1.5 million (1967), with updated continuing guarantees executed accordingly.
Subsequent renewals from 1968 to 1973, same terms and conditions, secured by continuing guarantees.
On February 6, 1974, a credit line was increased to ₱5 million; a continuing guarantee covering this was executed solely by Clarencio S. Yujuico.
Promissory notes evidencing YLTC loans from April 30, 1975 to March 1, 1977 became due and demandable, totaling ₱6,020,184.90.

In 1977, Genbank was placed under liquidation; Allied Banking Corporation acquired its assets and liabilities.
Allied Bank, as successor-in-interest, sought to collect the amount covered by promissory notes from Jesus S. Yujuico.

A 1973 letter of revocation of continuing guarantees was sent by Jesus through Teodoro Presa to Genbank, acknowledged by bank officials.
According to the continuing guarantee’s terms, revocation releases the guarantor from liability on loans contracted after receipt of written notice.
The loans sued upon were contracted after the revocation and thus Jesus was not liable.
The increase of credit line and issuance of a new continuing guarantee for ₱5 million executed by Clarencio Yujuico constituted a novation, releasing Jesus from obligations under the previous guarantees.

There was credible evidence of revocation authorization by Jesus through Presa’s letter, received by Genbank.
The subsequent credit lines and guarantees released Jesus of liability.

Petitioner challenged the factual findings, especially the authenticity and effectivity of the revocation letter.
Raised issues on non-presentation of original documents, alleged witness bias, and absence of evidence on special power of attorney for Presa.

Whether the revocation letter purportedly sent by Jesus S. Yujuico effectively released him from liability as surety for the subsequent loans of YLTC.
Whether the continuing guaranty executed by Jesus was extinguished by novation when YLTC’s credit line was increased and a new continuing guaranty was executed solely by Clarencio S. Yujuico.
Whether the evidentiary weight accorded to the revocation letter and related testimonies by the lower courts was proper, considering claims of lack of originals, witness bias, and absence of direct authorization.
Whether Jesus’s undertaking under the continuing guaranties was that of a guarantor or a surety, and the legal implications of said characterization in assessing his liability.